By Jill Nolin, Montgomery Advertiser, jnolin@gannett.com
The former Madison Hotel in downtown Montgomery, which has struggled to reinvent itself over the years, will undergo a $5 million overhaul and reopen later this year as Doubletree Hotel, a 130-room facility.
John Tampa, who bought the beleaguered hotel site late last year, said he plans to gut the hotel. He hopes his investment and the drastic renovation project will return the hotel to its former glory of the 1970s. It was most recently called the Clarion Hotel.
"Nothing will stay except the walls," Tampa said Thursday, adding that he hopes to open the new hotel this summer.
The hotel generated a buzz in the community when it was first built in 1973, according to local historian Mary Ann Neeley. At the time it was considered "quite a rarity" because of its decor and unusual mascots -- it kept live birds in cages in the lobby -- and its restaurant offered Montgomerians a chance to taste fine Italian food, according to Neeley.
"It was the first of the nicer hotels in downtown," Neeley said.
The possibility of the hotel seeing a rebirth has been intimated before, but those past failures have not dulled the enthusiasm among city officials. Mayor Todd Strange held a news conference on Thursday to announce Tampa's decision to renovate and reopen the hotel. Construction has already started.
Strange believes the suites that the hotel will offer will create ample space for the families that come to Montgomery for athletic events at Cramton Bowl and the sports complex that is still under construction. He also said the hotel project will allow the city to better market the convention center.
This Doubletree Hotel will serve as an overflow hotel for the Renaissance Montgomery Hotel & Spa at the Convention Center, but that does not mean it is skimping on features. The hotel will have a fitness center, a full-service restaurant and bar, and 10,000 square feet of meeting-room space that would accommodate as many as 500 people.
Tampa already runs three other hotels in the Montgomery area: Two Hampton Inn and Suites hotels -- one in downtown and one in Hope Hull -- and a Fairfield Inn and Suites in Hope Hull that will open in April.
Tampa attributed the site's past struggles with timing -- the momentum of downtown redevelopment just was not there -- and the way the hotel was operated. He also believes the Doubletree brand will lend itself well to the hotel.
"We believe the opportunities in downtown (Montgomery) are better than any other market," Tampa said. "We believe the growth is here."
It is unclear how much demand there is for more hotel rooms in the immediate future, but Dawn Hathcock with the Montgomery Area Chamber of Commerce anticipates a growing demand in the next few years.
The occupancy rate of hotels in 2011 was 52 percent, which was up only about 1.5 percent from 2010. The hotels that are the downtown grouping -- that includes the Embassy Suites Hotel, Renaissance and Hampton Inn in downtown and the Homewood Suites and Hilton Garden Inn off Exit 4 -- had an occupancy of 64 percent last year.
Montgomery currently has more than 7,000 rooms throughout the city. So far this fiscal year, the lodging tax proceeds are up 5.2 percent after a particularly strong month in December, according to city records.
"There's a lot of things on the books, but it always comes down to what translates into real numbers so you never know, but I'm optimistic about it," Hathcock said Thursday. "The hard thing, too, is that what we're selling today doesn't happen for two years."
Hathcock likes the location of the new Doubletree Hotel because it is in the middle of the new sports complex on Madison Avenue, government buildings and the convention center.
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SPANISH FORT, Alabama  -- A California investor paid $1.56 million for a newly built, 6,200-square-foot Advance Auto Parts store on 1 acre on Mill Lane, off Ala. 181, in Spanish Fort, according to Charlie Christmas of Christmas Properties. He is one of the developers of the store, which is across from the Eastern Shore Centre.
Eastern Shore Baseball Academy opens this week in a 7,000-square-foot building in Austin Place Commercial Park on Rand Avenue, off Baldwin County 13, in Daphne, according to owners Tim Cockrell and Jared Myrick. The indoor facility features batting, pitching and catching mounds for baseball and softball, as well as private instructors.
Local investors paid $450,000 for the 15-acre Appaloosa Commercial Park on U.S. 98 in Elberta, according to Peggy Summerville of ERA Class.Com, who represented the buyers. Skip Davis of ERA Class.Com worked for the seller. The property is 7 miles east of the Foley Beach Express.
Six months after paying $250,000 for the bank-owned, five-unit Surf Rider condominium complex on 10th Street in Gulf Shores, the local investor has sold it for $285,000 to Louisiana investors who were represented by Gloria Sims Crump of REMAX of Gulf Shores. Three of the five two-bedroom units were renovated, she said. The 1980's complex is are across the street from the beach.
Dependable Machining Services paid $444,000 for a 15,000-square-foot office warehouse at 23226 Grissom Drive in Robertsdale, according to Philip Hodgson of Coldwell Banker Commercial Reehl Properties, who represented the seller. Pete Riehm of Grubb & Ellis/Peebles & Cameron worked for the buyer.
Beauty & Beyond has leased 11,040 square feet at Westgate Shopping Center on Airport Boulevard in west Mobile, and plans to open in early spring, according to Matt Cummings of Cummings & Associates, who represented the landlord. Christmas Properties worked for the beauty supply business.
PS Services, a tire distributor, has leased an 8,360-square-foot office warehouse at 1800 E. I-65 Service Road N., according to Bob Cooper of Prudential Cooper & Co. commercial division.
Jay A. York PC has relocated to 2,325 square feet in The Executive Center at 917 Western America Circle, according to Janet Keene of Bender Real Estate Group, who worked for the landlord. Tricia Graham of Roberts Brothers West represented the law firm.
Birmingham-based law firm Heninger, Garrison, Davis has opened in 780 square feet at 169 Dauphin St., on Bienville Square, according to Lewis H. Golden of The Drummond Group.
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Jan 18, 2012 10:50 AM, By Elaine Misonzhnik, Senior Associate Editor
With the increasing popularity of multifamily properties as an investment class, some industry pros are beginning to question whether the sector might end up overbuilt.
So far during this real estate cycle, developers have been extremely conservative in delivering new product to the market. In 2011, less than 40,000 units came on line, the lowest figure in more than 30 years, according to Reis Inc., a New York City-based research firm. Marcus & Millichap Real Estate Investment Services, an Encino, Calif.-based brokerage firm, estimates that multifamily construction completions last year totaled just 35,000 units.
Yet going forward, construction activity in the sector will undoubtedly expand.
In October, 47 percent of respondents to a quarterly survey administered by the National Multi-Housing Council (NMHC), a Washington, D.C.-based trade group, reported a substantial pick-up in land acquisitions, financing deals and permit applications for multifamily properties in their local markets. In 2012, Reis expects to see between 72,000 and 85,000 newly completed units, while Marcus & Millichap anticipates 85,000 new unit deliveries.
Given the abundance of demand for new apartments, that still won’t put the sector in danger of overbuilding in 2012. In 2011, the national vacancy rate for multifamily properties declined 120 basis points from the year prior, to 5.4 percent, Marcus & Millichap reports. Effective monthly rents rose 4 percent, to $995 per unit. This year, multifamily vacancy should fall another 40 basis points, to 5 percent, in Marcus & Millichap’s estimates. Effective rents will likely rise 4.8 percent.
About 43 percent of respondents to the NMHC survey said that multifamily development is near the right level given existing demand, while 54 percent said that demand continues to significantly outstrip supply, even with the expected ramp-up in new construction.
“It is improbable that we will face overdevelopment in 2012 because strong demand should remain in place through the coming year,” says John Chang, vice president of research services with Marcus & Millichap. “For example, the prime renter cohort, aged between 20 and 34, will continue to grow significantly and enjoy an outsized share of job gains. Although employment is not expected to grow at an exceptional pace, it should outpace 2011 performance in the coming year, generating significant housing demand.”
“Almost all markets will experience vacancy declines in the coming year as demand outstrips supply additions,” he adds.
Jubeen Vaghefi, managing director and national leader of the multifamily practice with Jones Lang LaSalle, a Chicago-based real estate services firm, echoes Chang’s sentiments. He anticipates that in core markets, multifamily rents will grow between 5 and 8 percent in 2012. In secondary markets, rents might rise another 3 to 5 percent.
“If you look back over the last five years, there hasn’t been much in the way of new supply, and most people are leaning toward renting versus buying,” Vaghefi says. “Occupancies in most markets are up, so in 2012, we see a continuation of last year.”
Beyond the bend
Things might get trickier, however, once 2013 comes around.
The NMHC reports that 22 percent of its survey respondents said that apartment market conditions in their regions were looser than three months ago, compared to only 3 percent in July. About 51 percent said that conditions remained the same, compared to 30 percent in July, and another 27 percent reported that conditions have tightened, compared to 67 percent in July.
The NMHC Market Tightness Index in October stood at 56, down from 82 in July and a peak of 90 in April. A reading above 50 indicates that market conditions are getting tighter; below 50 shows that market conditions are getting looser.
Even with substantial demand for new apartments, net absorption in the multifamily sector decreased significantly in 2011, to 153,000 units from 225,000 units in 2010, according to Marcus & Millichap. With less than 40,000 new units added to the market last year, lower absorption levels haven’t threatened to become a problem so far.
But as the number of new construction units spikes to between 105,000 and 250,000 in 2013, over-building may become a legitimate concern, according to Victor Calanog, vice president of research and economics with Reis. In the past 20 years, new multifamily construction peaked at 188,870 units in 1999.
As of October, permits for apartment buildings containing at least five units increased 45 percent year-over-year, to 232,000 units, reports Marcus & Millichap. Given a 12-to-18-month construction window, that means the industry might begin to see an imbalance between supply and demand starting in 2013.
“We’ve been bringing up the possibility [of overbuilding] for more than a year now,” says Calanog. “In terms of timing, we don’t think much of the supply will hit till late 2012—that doesn’t even account for the usual delays we experience in commercial real estate construction. If there is indeed a deluge of new buildings coming to the market, the sector will probably feel the brunt of any pain it might cause in 2013.”
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Tornado damage and UA's increased enrollment goals have developers wanting to build, build, build for Tuscaloosa's student market
By Patrick Rupinski
Staff Writer
Published: Sunday, January 15, 2012 at 3:30 a.m.
TUSCALOOSA | When Carter, an Atlanta developer, proposed building a student housing complex along the city's Riverwalk last month, it ran into opposition from City Hall, which questioned whether the development was the best use for the site.
But the proposal and other plans over the past few months to build more student housing complexes sparked other questions about how much student housing Tuscaloosa needs, as well as where they should be built and what impact the additional student housing complexes might have on the city, its infrastructure and the existing rental market.
At least three student housing complexes have been proposed since last summer, and those who track the rental housing market say more proposals are likely.
Two primary factors are driving the interest in student housing:
n The University of Alabama's enrollment has increased by more than 50 percent in the past decade, and the university has said it hopes to increase enrollment, adding about 4,000 more students by 2020.
n The April 27 tornado destroyed or damaged about 12 percent of the city's housing units, including owner-occupied houses and rental units. It destroyed some
off-campus housing rented by students, but more dramatically increased the total number of people looking for housing.
Those factors, coupled with a depressed national market for construction, caused more developers to look at Tuscaloosa as a possible bright spot for new construction.
UA has enough on-campus housing for 7,700 students. But more than 75 percent of its 31,747 students live off campus. In recent years, the number of students living off campus has grown with enrollment, which was about 20,000 students in 2003.
The university is building more on-campus housing, but will also get rid of some of its older dorms, resulting in a slight decrease in on-campus housing next fall, when the new North Bluff I Residential Community will open with about 970 beds.
This summer, the older Rose Towers, which has 995 beds, will be torn down. And one of UA's Highlands buildings, which has about 30 beds, will not be in use this fall to make way for new storm sewer construction on the north side of campus, according to campus officials.
More on-campus housing will become available in future years.
The board of trustees has approved construction of a second phase of North Bluff, which is scheduled to open fall 2014 with about 860 beds, said UA spokeswoman Cathy Andreen.
Meanwhile, the university has set a goal of increasing its enrollment. UA President Robert Witt has said he wants to add about 4,000 more students to bring enrollment to 35,000 students by 2020, if not earlier.
That would further increase the number of students needing off-campus housing.
“From the city's perspective, we hope to encourage student housing as close to the university as possible, and we have adopted zoning ordinances in recent years to encourage this,” Maddox said in an email.
The mayor came out against Carter's $40 million, 856-bed student complex on the Riverwalk last month, saying the project was not the best use for that site.
The city's planning commission voted 4-to-4 in December on the project; the tie vote allows the developer to still seek City Council approval, but without the planning commission's blessing.
Planning Commissioner Steve Rumsey was among those opposing the Carter project.
“As a planning commission member, I want to see the city develop in an orderly manner,” he said.
There should be an independent, unbiased study on the impact of the university's growth to help determine how much additional student housing is needed, he said.
Rumsey, who rents some houses to students, said the planning commission and the city need to know how much of the rental housing was destroyed by the tornado and how much of that was rented by students.
The study also needs to assess whether enrollment will eventually stay at 35,000 students, or possibly peak and then decrease.
Rumsey said the city also should determine how all new large apartment complexes will affect the city's infrastructure, particularly the sewer systems.
The sewerage lines in some parts of the city are at or near capacity now, he said, and some areas might not be able to handle large new housing complexes unless sewer systems are upgraded.
Developers in Tuscaloosa do not have to pay an impact fee, which can be used to upgrade infrastructure in the future, he said. That makes the city more attractive to out-of-town developers, who might build a project and sell it before sewerage overloads occur.
And if that happens, it will be the taxpayers who will pay for the sewer upgrades, he said.
Tuscaloosa's Planning Department Director John McConnell and Deputy Director Philip O'Leary did not respond to several calls and emails requesting information on the student housing situation or the status of proposed developments and their effect on the city.
In addition to the Carter complex on the Riverwalk, two other proposals for new student housing complexes have been announced since the tornado. There is a $40 million, 868-bed complex planned by Tuscaloosa developer Stan Pate off Alabama Highway 69 South and Kauloosa Avenue and a $41 million, 774-bed complex by a Tennessee company for the old Delaware Jackson public housing site near DCH Medical Center and the UA campus. Both of those projects have received zoning approvals from the City Council.
Steve Kennedy, president of Sealy Management Co., which has about 4,000 apartment units throughout the Tuscaloosa area, said that before the city approves new projects elsewhere, it should give those in the tornado zone a chance to rebuild.
“From a basic fairness issue, I would like to see the people whose property was displaced by the tornado have a chance to rebuild before the market is saturated,” he said.
Grayson Glaze, executive director of the Alabama Center for Real Estate at UA, said, “Overbuilding will continue to be the primary concern for the local market today, tomorrow and in the future.
“The fact is the university's growth and the overall appeal of the Tuscaloosa community is very attractive to outside developers. This appeal has only increased since the events of April 27, as perceived opportunities jump off the pages of the Tuscaloosa Forward rebuilding plan,” he said.
“The phrase ‘Timing is everything' comes to mind. No market can defy the fundamentals of supply and demand. As long as delivery of new development, including UA on-campus housing units, remains in balance with the growth in both the student and the general population of Tuscaloosa, the multi-family market should continue to experience solid performance.
“Smart growth will be the key to the long-term health of this important housing sector in Tuscaloosa.”
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